Friday, FBR Capital Markets reiterated Northrop Grumman Corp. (NOC) stock with an Outperform rating and a price target of $75. The brokerage increased its 2010 first quarter EPS estimate to $1.33 from $1.26, and its 2010 estimate to $5.80 from $5.50.
Analyst Patrick McCarthy noted that Northrop Grumman reported fourth quarter results on February 4 that were lower than consensus expectations in revenues and EPS. The company reported revenue of $8.9 billion was lower than the consensus of $9.0 billion but higher than our estimate of $8.8 billion.
The analyst said that the company's revenues, excluding the recent TASC divestiture, were up 2% year-over-year. Segment operating margins were lower than expected for the quarter and were down year-over-year, mainly due to operational headwinds faced at shipbuilding and electronic systems.
The analyst added that the company's EPS were $1.19, versus the consensus of $1.26 and his estimate of $1.18. The company issued EPS guidance for 2010 at $5.70 to $5.95, on revenues of $34.0 billion to $34.6 billion.
However, the analyst noted that, despite decent results this quarter, there is likely to be additional volatility in ship systems over the next few quarters, and he views other large-cap defense names as more attractive investments at the current time.
Currently, NOC is down $0.58 or 1.00% and trading at $57.32.
For comments and feedback: editorial@rttnews.com